After its recent surge, the Polynovo share price is down 8% this week. Is it a buy?

Polynovo shares have moved in circles over the past week.

| More on:
A female scientist sits at her desk looking stressed out while working in an AnteoTech lab.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Polynovo shares are up 2.53% to $1.215 during late Friday afternoon trade 
  • The company has been heavily targeted by short sellers despite a series of insider buying action 
  • Macquarie sees Polynovo shares as an attractive upside, while Wilsons has a different view 

The Polynovo Ltd (ASX: PNV) share price has retraced this week despite insider buying from the company's chair, David Williams.

After hitting a 3-month high of $1.413 earlier this month, the medical device company's shares are failing to gain traction.

In fact, this week alone, Polynovo shares are down 8.3%.

This comes regardless of its shares travelling 2.53% higher to $1.215 apiece.

Let's take a look and see if Polynovo shares are undervalued at current prices.

Polynovo shares in bargain territory?

The investor sentiment on the Polynovo share price has been mixed due to the inconsistent performance of the business. This has ultimately attracted a large number of short sellers to the company's registry.

Short-selling is a common trading strategy that aims to profit from the fall in the price of a security. The goal is for an investor to borrow shares and sell the shares, and then buy them back at a lower price for a profit.

Last week, the Australian Securities & Investments Commission (ASIC) released its short position report revealing the level of short interest within companies.

As such, Polynovo remained in the top 10 list with 11.27% of its shares being shorted by investors.

In comparison, ASIC reported a short interest of 5.26% in Polynovo last year on 20 May. This is 50% less than where its shares are shorted today.

Given the large increase in short positions being taken up, investors might be concerned about the company's inconsistent performance.

A couple of brokers rated the company's share price with varying price points in late February.

The team at Macquarie cut its 12-month price target for Polynovo shares by 44% to a $1.60 apiece. This implies an upside of 31.6% from where the company's shares are trading today.

Furthermore, analysts at Wilsons dropped their outlook on Polynovo shares by 22% to $1.11. It appears that the broker is almost on the mark as to where the medical company's shares are valued at.

Polynovo share price summary

When looking at year to date, the Polynovo share price has lost 20% in value for shareholders.

However, in the past 12 months, its losses have magnified by around 53%.

Based on today's price, Polynovo presides a market capitalisation of about $777.48 million.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended POLYNOVO FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Healthcare Shares

Excited couple celebrating success while looking at smartphone.
Healthcare Shares

Guess which ASX 200 stock just jumped 9% on big news

Let's find out what is getting investors excited today.

Read more »

Male doctor in a lab coat working at laptop looking serious.
Healthcare Shares

What are Cochlear shares worth according to Macquarie?

Let's see what the broker is saying about this blue chip.

Read more »

Shot of a mature scientists working on a laptop in a lab.
Healthcare Shares

When will CSL shares finally catch a break?

Here's where analysts think the biotech stock is heading next.

Read more »

An analyst wearing a dark blue shirt and glasses sits at his computer with his chin resting on his hands as he looks at the CBA share price movement today
Healthcare Shares

JP Morgan initiates coverage of Telix Pharmaceuticals. After rising 1,667% in 5 years, is it still a buy?

Can this ASX 200 juggernaut go higher?

Read more »

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

Why this top broker expects CSL shares to surge 26%

A leading broker foresees a big rebound ahead for CSL shares. But why?

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Healthcare Shares

Guess which ASX All Ords stock is jumping on big US news

This small cap is catching the eye on Thursday. But why?

Read more »

three excited doctors with hands in the air
Healthcare Shares

Two ASX healthcare shares that could be set to double

This broker has buy recommendations on these two shares. 

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Healthcare Shares

Telix shares jump 7% on big US news

Let's see what is getting investors excited on Wednesday.

Read more »